The proposed study will extend previous research concerning cost shifting by acute care hospitals among payers. The aims of the project are to: (1) determine the need for and ability to cost shift by acute care hospitals during four time periods characterized by different reimbursement policies and stringency: the early 1980s, two periods in the mid-1980s and the early 1990s; (2) evaluate changes in both the need and ability to cost shift over time; (3) evaluate the relationship among the markup for private payers and factors that may affect the need and ability to cost shift including: government payment shortfalls, market characteristics, and hospital ownership. Providers and private payers argue that the result of the cost containment efforts of government payers is a higher payment burden on insurers, employers and individuals--the subsidization of one class of payers by another. This subsidization may be related to the inability to control overall hospital costs in this country. Hospitals have fewer incentives to control their total costs if they can shift costs among payers. Cost shifting to private payers also makes it difficult to expand benefits and coverage for individuals, especially those employed by small businesses. Despite the long history of cost shifting by acute care hospitals in the United States, there has been relatively little empirical research regarding the extent of, changes in, or factors associated with cost shifting. The proposed study will evaluate panel data drawn from four time periods during the last decade for California hospitals. It will improve upon previous research by (1) evaluating measures of the need to cost shift for both the year during which cost shifting occurs and the previous year, (2) updating previous descriptive analyses and (3) estimating a multivariate regression model of cost shifting controlling for factors that may affect the need and ability to cost shift including market conditions and hospital ownership.